Dollar rises, Fed shows caution toward taper

Wednesday, 8 Jan 2014 | 2:27 PM ETReuters

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The dollar gained against a basket of currencies on Wednesday after minutes of the Fed's Dec. 18-19 policy meeting showed many members of the policy-setting Federal Open Market Committee wanted to proceed with caution in trimming the asset purchases.

Earlier, better-than-expected U.S. private sector jobs growth data suggested the recovery in the world's largest economy gained traction at the end of last year.

U.S. private employers added 238,000 jobs in December, more than expected and the best reading in 13 months, a report by a payrolls processor. ADP's National Employment Report also revised November's job gains higher.

The ADP report comes two days ahead of the government's nonfarm payroll report, a measure of the labor market that is more comprehensive and includes both public and private sector employment.

Analysts are looking for 196,000 jobs to have been added in December, along with a rise in private payrolls of 195,000. Friday's report may provide more clues as to how quickly the U.S Federal Reserve will cut back on its bond-buying program this year.

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Foreign exchange currencies.

In early New York trade, the dollar rose 0.3 percent to 104.90 yen, down from an earlier high of 105.12 yen, but above Monday's two-week low of 103.88. Last week the dollar reached a five-year high of 105.44 yen.

Against a basket of six major currencies, the dollar reached a six-week high of 81.048 and was last up 0.4 percent on the day at 81.14.

The dollar also firmed against the euro, with the single currency last trading 0.4 percent lower at $1.3555.

The Swedish central bank's emphasis on macroprudential measures to deal with the effects of household debt was read as leaving the door open to another cut in interest rates. Minutes from the bank's last meeting also showed that two members supported a bigger cut in rates last month.